Bullish Gains Mean Bearing the Volatility

The future usually becomes more apparent when you stop paying attention to every tiny detail happening today. 

And the more you can block out the short-term noise, the more you’ll feel your confidence build in what’s ahead.

Sure, there’s lots of change underway; the baton is being passed from the Baby Boomers to Gen Y’s Millennials (the circa 14 to 34 age cohort), the noise of uncertainty is driving emotional market tantrums, and the “internals” can and will stink at times (for a quarter or two).

But let’s try separating the important stuff from the garbage and fake stuff.

Who Moved My Inflation?

Two quarters ago, the experts were crowing about how inflation pressures were rocketing upwards and the US Federal Reserve decisions were way behind.

They said "4 rate hikes in 2019."

What we said was "Ignore that garbage - Gen Y and the rising tide of technology will be the most deflationary event we have witnessed in our lifetimes...."

Let's go to the tape:

Now, we can't overlook the fact that more pressure is coming.

Don't forget that the US has become the Saudi Arabia of the oil market.

So, imagine for a moment that five years ago, we suggested, "The US will be the largest producer of oil on the planet thanks to technology." 

Many of you might have thought we were nuts, right?

Well, that’s exactly what we did.

And that’s exactly what a lot of you thought.

And More Dominos Falling…

We noted recently that the impact on refi's - both corporate and personal – would lead to millions and millions saved by consumers in interest costs.

Lo and behold!

Which, of course, brings up this crazy thought: Bring on more panic, folks.

Let’s pray even harder for a summer stock market swoon.

So, What’s Next?

• Low rates = cheap debt refi's (corporate and consumer)
• Cheap debt refi's = higher cash flows, better margins and more jobs
• Higher cash flows, better margins and more jobs = better retail sales, and
• Better retail sales = good things.

Keep in mind that once you start seeing those dominoes fall as the summer haze thickens, rest assured you’ll be told that they’re bad for us.

As we say repeatedly in our video library: Risk is the source of long-term investment returns.

And being able to bear the volatility that so many others can’t allows you to gain the rewards that risk-averse investors have taken themselves out of the running for; by swinging to cash or fleeing into Treasury bonds or hedging away all of their potential upside.